FCC chief floats new supply chain rules for telecom

By Mark Rockwell

Mar 26, 2018

Leveraging a multibillion federal subsidy, the nation's communications chief is looking to new rules that would bar foreign telecommunications equipment suppliers who are deemed a threat to national security.

At the Federal Communications Commission's next public meeting on April 17, Chairman Ajit Pai plans to propose rules that would curb billions in federal subsidies to U.S. telecommunications companies who use certain foreign manufacturers.

The proposed rules would bar money from the commission's $8.5 billion Universal Service Fund from going to U.S. telecommunications providers that buy equipment from companies that "pose a national security threat" to U.S. networks.

"Hidden 'back doors' to our networks in routers, switches -- and virtually any other type of telecommunications equipment -- can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more," Pai said in a March 26 statement introducing the proposed rules. "Although the FCC alone can't safeguard the integrity of our communications supply chain, we must and will play our part in a government- and industry-wide effort to protect the security of our networks."

The proposed rules would apply only to future spending on gear, senior FCC officials explained in a conference call with reporters on March 26, but they might apply to upgrades to that equipment.

The FCC's Universal Service Fund was created in the mid-1990s to help get telecommunications services to underserved or underprivileged areas where such coverage could be scarce.

The FCC will seek public comment for 60 days on how the commission could define a threat to the network, how it might enforce the rules and how funds could be recovered if enforcement actions were taken.

Although Pai's proposed rules don't single out specific companies such as Chinese telecom gear makers Huawei and ZTE or Russia-based Kaspersky, FCC officials said companies from both countries have caused concern among U.S. lawmakers who fear they could install "backdoors" that allow illicit access to network switches, routers and other equipment.

The Defense Department barred Huawei and ZTE telecommunications equipment and services, or any other telecommunications equipment connected to the Chinese or Russian government from its networks, and the federal government has barred Kaspersky software. FCC officials said the market share of those firms in civilian telecommunications infrastructure, "is not zero."

The measure is about preventing those companies from expanding that small market share any further, they said.

The officials said the proposed rules are in part a response to a December 2017 letter to Pai from Sen. Tom Cotton (R-Ark.) and other lawmakers voicing concern about a U.S. carrier deploying Huawei consumer products.

Pai teed up the new policy in a March 20 reply to the lawmakers promising "proactive steps to help ensure the integrity of the communications supply chain" in the near future.

A key U.S. telecommunications industry association has already voiced support for Pai's proposed rules.

"We strongly support efforts by the government to address concerns regarding certain communications equipment providers deemed to pose a heightened security risk," said Cinnamon Rogers, spokeswoman for the Telecommunications Industry Association in a March 26 statement.

"The FCC has a key role to play in these efforts, and we appreciate Chairman Pai's recognition that addressing security concerns requires work across the federal government in partnership with the ICT industry," she said.

Pai will call for a vote on this proposal at the commission's April 17 meeting.

About the Author

Mark Rockwell is a senior staff writer at FCW, whose beat focuses on acquisition, the Department of Homeland Security and the Department of Energy.

Before joining FCW, Rockwell was Washington correspondent for Government Security News, where he covered all aspects of homeland security from IT to detection dogs and border security. Over the last 25 years in Washington as a reporter, editor and correspondent, he has covered an increasingly wide array of high-tech issues for publications like Communications Week, Internet Week, Fiber Optics News, tele.com magazine and Wireless Week.

Rockwell received a Jesse H. Neal Award for his work covering telecommunications issues, and is a graduate of James Madison University.